H-P Embraces Google in Entering Tablet Market

For the second time in two years Hewlett-Packard is trying to crack into the consumer tablet market. This time it’s betting on a different brand of software.

H-P unveiled a seven-inch tablet called the Slate 7 during the Mobile World Congress in Barcelona that runs Google 's Android operating system, a shift away from longtime partner Microsoft.

The computer maker’s executives acknowledged the blow to the maker of Windows but said it would remain an important long-term partner. “Obviously (Microsoft) prefers we only work with them,” said Alberto Torres, who leads H-P’s mobility unit, in an interview. He added that “we haven’t seen anything other than encouragement” by Microsoft for H-P to make more Windows tablets.

A spokeswoman for Microsoft didn’t immediately respond to a request for comment.

Omar Javaid, a vice president in H-P’s mobility unit, said that in order to be relevant in the marketplace, H-P must give consumers more choices–meaning Android. It’s become a multi-operating system world, he said, noting that H-P already manufactures a laptop running Google’s other operating system, called Chrome, which competes with Windows-powered PCs.

For Google’s Android unit, meanwhile, H-P’s move provides a new and significant partner in its effort to repeat in tablets the way Android blew past Apple in smartphone market share. The relationship also could help prevent Samsung from gaining greater control of the Android tablet market, as it has with smartphones–an issue that has Google increasingly worried.

Given H-P’s scale, “Google clearly sees our potential as an important player” Torres said. A Google spokeswoman declined to comment.

By setting a $169 price tag for the device in the U.S., H-P may spur other manufacturers to aim lower, making tablets even more affordable to the masses. The Slate 7 is expected to be available at U.S. retailers in April and by May will be sold in many European and Asian countries.

At $169, Torres said the Slate 7 will be profitable, while implying it wouldn’t not be a big money maker. “Our objective is to gain volume,” he said.

The devices line up competitively with Google’s $199 Nexus 7 and Amazon’s $159 Kindle Fire tablets.

Torres added that that in the future H-P can generate more revenue and profit by selling accessories such as keyboard docks, tablet covers and other services such antivirus software, which he said was “wildly unexploited in tablets.”

He said that by year’s end, H-P expects to have several consumer tablets on the market and that a Windows tablet could be among them. While the Slate 7 is a pure “entertainment” device for social networking, games, watching videos and listening to music, future devices will have more features geared toward professionals who would use the device at work as well as for fun in their free time.

H-P is the No. 1 maker of desktop and laptop PCs, a category that’s getting destroyed by tablet computers led by the iPad. Its first major foray into the “post-PC” world came after H-P’s 2010 acquisition of Palm, maker of WebOS that powered smartphones and tablets. The products failed to get traction and were shut down in 2011.

In September 2012 Torres was hired to re-launch H-P’s consumer-tablet initiative.

He inherited a core team that included engineers that had worked on hardware for WebOS devices, and he hired a leadership team. He said there were just over 100 people in the unit, though that will grow after H-P moves its Windows tablet group under Torres’ control. That group makes higher-end Windows tablets that are sold directly to businesses rather than to retail consumers.

Torres said he was “surprised” that rival Dell got out of the consumer-tablet business after failing to gain traction. “It gave H-P an even bigger opportunity,” he said.

Because of H-P’s manufacturing expertise and connections with retailers worldwide, Torres said, “H-P has a lot of the capabilities to be successful” in selling tablets to consumers.